The Bank of Canada’s initial rate cuts this summer didn’t boost housing activity as much as expected. However, with the additional cut of .25% earlier this month, and more potential cuts this year, we could still see an impact on the housing market. Even though there’s not a substantial change in affordability, potential buyers are starting to see the light at the end of the tunnel. This will attract individuals who want to get ahead of the curve, as finding the right house for them is more valuable than a potential lower interest rate.

That said, we are not expecting a massive increase in home prices, as inventory is also likely to rise. This is good news for buyers, but it is essential to remember that every market will be different, so it’s not a blanket statement across the country.

Even though the current Bank of Canada rate of 4.25% might not significantly improve home affordability, it offers buyers hope as interest rates trend downward. It is important to remember that only variable-rate products are directly impacted by the Bank of Canada announcements. Fixed-rate mortgages are based on the bond yield market, for which there’s no pre-scheduled announcement.

On the positive side, we have also seen some reductions there, so fixed rates have been trending down.
Canadians are eagerly anticipating further rate cuts to enhance home affordability. While consumer confidence is rising, balancing mortgage affordability with other economic indicators still has many on the sidelines. Job vacancies are at pre-COVID levels, and our unemployment numbers have been trending up, which will make some uneasy depending on their market.

Additionally, higher property taxes, stricter stress-test rates, and the ongoing wave of mortgage renewals will determine the success of the fall market.
On the flip side, in 2023 alone, Canada welcomed 46% more new residents, which adds to the demand for housing and influences pricing. With rates continuing to drop, there’s hope that prices will stabilize as supply increases to meet rising demand. This potential stabilization of prices provides a sense of security to both buyers and sellers in the market.

If you are looking to enter the housing market as a buyer or seller or have questions about how to best prepare for a future move, don’t hesitate to contact me!

Until next month,

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Raoul Hunt

Mortgage Broker

DLC The Mortgage Source – Independently Owned & Operated – Licence # 10145

Ottawa: +1-613-218-8798

GTA: +1-647-297-8798

E: raoul@huntformortgages.com